NC Repubs implement HUGE gamble called the modified flat tax

[JEDI]

http://money.cnn.com/2013/08/08/pf/taxes/tax-reform-north-carolina/index.html?iid=HP_LN

The change, signed into law last month, creates a modified flat tax system, with a single income tax rate, an increased standard deduction and fewer tax breaks, as well as the elimination of the personal exemption and a $50,000 deduction for small business owners. It also repeals the state's estate tax.

The big hope: The new economic activity will compensate for the estimated $2.4 billion revenue loss over the next five years as a result of the reforms.

But the overhaul -- which represents a scaled back version of earlier proposals -- has been heavily criticized by many, mostly liberals. They contend its tax cuts will disproportionately benefit the rich and the revenue loss will cut into government services.


so nc is gambling that business will flock to nc because it is now more business friendly.

and I can see more and more deductions added by future politicians trying to buy votes and corporate donations.

if this fails, NC becomes the next Detroit?

 

[EagleKeeper]

They can easily change the tax laws for the state.

City is different; much less flexibility in tax revenue.

What this may show is will the Republican concepts of encouraging business be a better model than one of government controlling business.

 

[berzerker60]

If you define "liberals" as "those who oppose the NC GOP," then the large majority of North Carolina are liberals. What the state house there has done this past session is truly shameful. The state Democrats got the majority of the votes in the last election, yet only received 4/13 seats because of the disgusting gerrymandering. But ignoring that they explicitly did not have a mandate of any kind, they rammed through the most extreme Tea Party legislation possible. Then had a (literal) dance on the floor after the session ended to celebrate their contempt for democracy.

If the NC GOP actually had the majority of the votes, I wouldn't be as upset about what they've done to the state. I'd hate the legislation, but it would be what the people wanted, so fine. But it's explicitly not.

NC won't become Detroit so much as a third world nation (to the extent there's a difference). The rich get along fine, everyone else is so completely fucked that those with talent and ability leave the state as soon as they graduate. Good new for Virginia, though!

Edit: Details -
http://www.publicpolicypolling.com/main/north-carolina/

For the first time in a PPP poll, North Carolina Governor Pat McCrory has a net-negative approval rating, seeing a 15-point net decline in just the last month, and 22 points over the last three. Now only 40% of voters approve of the Republican’s job performance, and 49% disapprove...

This decline in public esteem is a result of the policies proposed by the General Assembly, which itself is in even worse shape than the governor. Only 20% approve of their performance, with 56% disapproving. Voters differentiate starkly between the two parties, with GOP legislators at a 35-55 favorability spread, versus the Democrats’ 40-45. As a result, Democrats now lead the generic legislative ballot by a 51-42 margin, up slightly from a 48-41 edge in mid-June.

http://www.nytimes.com/2013/02/03/o...-gerrymander-of-2012.html?pagewanted=all&_r=0

In North Carolina, where the two-party House vote was 51 percent Democratic, 49 percent Republican, the average simulated delegation was seven Democrats and six Republicans. The actual outcome? Four Democrats, nine Republicans — a split that occurred in less than 1 percent of simulations. If districts were drawn fairly, this lopsided discrepancy would hardly ever occur.

 

[cubby1223]

North Carolina's state budget is nearly balanced, while here in Illinois we run a yearly $40+ billion deficit.

I don't think many people have a leg to stand on if they want to criticize what North Carolina is doing.

I'm very curious to find out how this changes the state moving forward.

 

[nehalem256]

The change, signed into law last month, creates a modified flat tax system, with a single income tax rate, an increased standard deduction and fewer tax breaks, as well as the elimination of the personal exemption and a $50,000 deduction for small business owners. It also repeals the state's estate tax.

The bolded are stupid ideas. A single income tax rate has no practical simplification of the tax code, while being nothing but a tax break for the very rich. If you have to tax anyone taxing dead people seems to be the best place personally.

A larger standard deduction and fewer tax breaks is a good thing assuming it is done in a revenue neutral way. Although personally it makes more sense to lower overall rates instead of having a larger deduction so that everyone pays their fair share.

 

[EagleKeeper]

The bolded are stupid ideas. A single income tax rate has no practical simplification of the tax code, while being nothing but a tax break for the very rich. If you have to tax anyone taxing dead people seems to be the best place personally.

A larger standard deduction and fewer tax breaks is a good thing assuming it is done in a revenue neutral way. Although personally it makes more sense to lower overall rates instead of having a larger deduction so that everyone pays their fair share.

Previously rate levels took into account expected deductions. Now it becomes simpler and business can plan accordingly.

If you remove the deductions; that increase the amount of revenue.
Now you figure out the amount of revenue that the state actually needs to operate and determine the rate needed across the board to get that revenue.

All they did was go all the way and select a single rate

 

[nehalem256]

Previously rate levels took into account expected deductions. Now it becomes simpler and business can plan accordingly.

If you remove the deductions; that increase the amount of revenue.
Now you figure out the amount of revenue that the state actually needs to operate and determine the rate needed across the board to get that revenue.

All they did was go all the way and select a single rate

And a single rate is anything more than a tax cut for the rich how?

Businesses/individuals can just as easily plan for their taxes if there are 5 brackets. Compute taxable income(made easier by elimination of tax breaks). Look up tax for said income in the booklet. Its the same no matter the number of brackets.

Also, given the large standard exemption there is already effectively 2 tax brackets. One with a rate of 0% up to the standard exemption, and then a second with a rate of X%. So how is having three, four, or six brackets more complicated on a practical level?

 

[Bowfinger]

I once turned down a very attractive job offer in NC. For a time I wondered if I made the right choice. Their antics over the last year or so make it clear i chose well. Pity, because it's a beautiful state, but they clearly need a bigger hand basket. May the Tea Party rot in the hell it creates.

 

[xBiffx]

I once turned down a very attractive job offer in NC. For a time I wondered if I made the right choice. Their antics over the last year or so make it clear i chose well. Pity, because it's a beautiful state, but they clearly need a bigger hand basket. May the Tea Party rot in the hell it creates.

Guessing the state doesn't miss you. MI would love your company, however.

 

[fskimospy]

Previously rate levels took into account expected deductions. Now it becomes simpler and business can plan accordingly.

If you remove the deductions; that increase the amount of revenue.
Now you figure out the amount of revenue that the state actually needs to operate and determine the rate needed across the board to get that revenue.

All they did was go all the way and select a single rate

How complicated the tax code is has zero to do with rates. Businesses have never had any problem -at all- in the complexity of the code due to rates. The complexity in the tax code has to do with all the deductions, credits, etc. I notice that the NC Republicans left in place the largest and most popular deductions, btw.

This will amount to a huge tax cut for the rich. Although I think that's an absurd idea, that's just my opinion. If you think we need to cut taxes on the rich that's your business, but lets not fool ourselves as to what this legislation is going to do.

 

[JEDI]

They can easily change the tax laws for the state.

City is different; much less flexibility in tax revenue.

What this may show is will the Republican concepts of encouraging business be a better model than one of government controlling business.

but its going to lead to economic warfare between the states.
it'll be a race to the bottom

 

[xBiffx]

but its going to lead to economic warfare between the states.
it'll be a race to the bottom

We already have this today. NC's decision doesn't really change that. There has been a great deal economic warfare between states like California and Texas with even governors launching a salvo on occasion. Even my home state of Nevada has been in constant competition with California trying to encourage people who want to leave to live in NV due to its lack of income tax.

 

[poofyhairguy]

but its going to lead to economic warfare between the states.

http://www.fwweekly.com/2013/07/18/texas-republicans-versus-new-york/

 

[Bowfinger]

Guessing the state doesn't miss you. MI would love your company, however.

Yes, but you're used to being wrong. I can't speak for NC specifically, but most states love educated, high-income, tech professional couples. Of course NC may not since we are educated, have critical thinking skills, and recognize that the so-called Tea Party is really an astroturf facade that some very powerful, wealthy people use as a propaganda front to dupe simpletons into voting against their own interests.

 

[glenn1]

I once turned down a very attractive job offer in NC. For a time I wondered if I made the right choice. Their antics over the last year or so make it clear i chose well. Pity, because it's a beautiful state, but they clearly need a bigger hand basket. May the Tea Party rot in the hell it creates.

It would be nice to have the context of which state you were in when you turned down the NC job offer. I've passed on job options there also because Charlotte truly is a boring city. Also, I haven't been to Raleigh-Durham in a while but would be wary of moving there because like Austin it's been experiencing exploding growth and may no longer be a town I would be interested in living in.

 

[Bowfinger]

It would be nice to have the context of which state you were in when you turned down the NC job offer. I've passed on job options there also because Charlotte truly is a boring city. Also, I haven't been to Raleigh-Durham in a while but would be wary of moving there because like Austin it's been experiencing exploding growth and may no longer be a town I would be interested in living in.

The offer was in Raleigh. I was in Iowa at the time. I turned it down not because of the location (again, it's a beautiful area and at that time was unquestionably more thriving and dynamic than central Iowa), but because I enjoyed what I was doing at the time and was very active in the local community. I had a senior position at a large banking company, but also held an elective office, was VP of our homeowner's association, and had an active sideline consulting business. My wife also held a senior IT position she loved, and worked with me on consulting. Nonetheless, the Raleigh offer was quite attractive and we gave it serious consideration.

 

[bshole]

Republicans doing the same old same old. Lowering taxes and while not lowering spending to make up the difference. They will either go bankrupt, get massive federal handouts to make up the difference and/or annihilate services. This is just one big bone to the rich.

 

[brycejones]

North Carolina's state budget is nearly balanced, while here in Illinois we run a yearly $40+ billion deficit.

I don't think many people have a leg to stand on if they want to criticize what North Carolina is doing.

I'm very curious to find out how this changes the state moving forward.

Kansas was in good shape before a similar "reform" effort was undertaken. Now suddenly the state budget is a mess and about to get messier. Also while railing against state debt the same GOP legislature has done little to address it instead preferring to kick that can down the road while at the same time looking for ways to taxes further. In the meantime we're still waiting for the massive influx of new businesses that were supposed to be on the way as soon as the tax code was changed.

 

[xBiffx]

Republicans doing the same old same old. Lowering taxes and while not lowering spending to make up the difference. They will either go bankrupt, get massive federal handouts to make up the difference and/or annihilate services. This is just one big bone to the rich.

Better to increase taxes and increase spending. Only make sure the former is less than the latter. In the end, it'll work out.

 

[fskimospy]

Kansas was in good shape before a similar "reform" effort was undertaken. Now suddenly the state budget is a mess and about to get messier. Also while railing against state debt the same GOP legislature has done little to address it instead preferring to kick that can down the road while at the same time looking for ways to taxes further. In the meantime we're still waiting for the massive influx of new businesses that were supposed to be on the way as soon as the tax code was changed.

Wait, I thought the flat tax was supposed to add in so much economic growth that it would make up for the shortfall?

Gee, nobody ever saw this coming.

 

[buckshot24]

Guessing the state doesn't miss you. MI would love your company, however.

We don't want him.

 

[Jimzz]

North Carolina's state budget is nearly balanced, while here in Illinois we run a yearly $40+ billion deficit.

I don't think many people have a leg to stand on if they want to criticize what North Carolina is doing.

I'm very curious to find out how this changes the state moving forward.

Yea its "nearly balanced" under the current code. How do you think it will do when they lose $2.4 billion over the next five years?

 

[xBiffx]

Yea its "nearly balanced" under the current code. How do you think it will do when they lose $2.4 billion over the next five years?

That would imply that they had it to begin with. They aren't losing anything.

 

[Paul98]

How is NC's economy doing right now and in the last few years?

 

[zsdersw]

Better to increase taxes and increase spending. Only make sure the former is less than the latter. In the end, it'll work out.

Only the ideas you support are good and will work. The ideas of those you typically disagree with are always bad and never work. 🙄